Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can someone please help me with all a, b, c parts . Thank you!! Operating cash inflows Strong Tool Company has been considering purchasing a
Can someone please help me with all a, b, c parts. Thank you!!
Operating cash inflows Strong Tool Company has been considering purchasing a new lathe to replace a fully depreciated lathe that would otherwise last 5 more years. The new lathe is expected to have a 5-year life and depreciation charges of $2,280 in Year 1: $3,648 in Year 2; $2,166 in Year 3: $1,368 in both Year 4 and Year 5 and $570 in Year 6. The firm estimates the revenues and expenses (excluding depreciation and interest) for the new and the old lathes to be as shown in the following table The firm is subject to a 40% tax rate on ordinary income a. Calculate the operating cash infiows associated with each lathe. (Note: Be sure to consider the depreciation in year 6.) b. Calculate the operating cash inflows resulting from the proposed lathe replacement. c. Depict on a time line the incremental operating cash inflows calculated in part b. a. Calculate the operating cash inflows associated with the new lathe below: (Round to the nearest dollar.) Year Revenue Expenses (excluding depreciation and interest) S Profit before depreciation and taxes Depreciation Net profit before taxes Taxes Net profit after taxes Operating cash flows (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) New Lathe Old Lathe Expenses (excluding depreciation and interest) $30,300 30,300 30,300 30,300 30,300 Expenses (excluding depreciation and interest) $25,600 25,600 25,600 25,600 25,600 Year Revenue S38,300 39,300 40,300 41,300 42,300 Revenue $35,600 35,600 35,600 35,600 35,600 4Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started